Eagle Bancorp (NASDAQ:EGBN)
was smacked hard in July on news of an investigation tied to potential
related party transactions involving former CEO Ron Paul, but it seems
like the market has calmed down about that issue and instead refocused
on what is a pretty high-quality Washington, D.C. area growth story
underpinned by healthy loan growth. Although spread compression remains
an ongoing risk, the shares are up about 15% from my last article and have recovered about a third of the investigation-driven decline.
I
believe Eagle shares are still undervalued, and I'm more comfortable
about the possible risk from the investigation, as management has
pointed to comprehensive insurance coverage for just such events. While I
don't want to underplay the risk of weaker loan demand, tighter
spreads, and a deteriorating credit cycle, those are more industry risks
than company-specific risks, and I believe Eagle is still looking at a
healthy long-term core earnings growth despite a likely low point in
2020.
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Investors Seem Refocused On Eagle Bancorp's Operations
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